UPDATE 7-Oil falls to 2-week low as Syria tensions ease
* Libyan committee will put forward proposals to end labor strikes
* China factory output growth tops forecast, retail sales up
* EIA raises world oil demand growth forecast by 20,000 bpd
* OPEC sees enough oil now, market share fall looms
* Coming up: API inventory report, 4:30 p.m. EDT (2030 GMT
(Updates prices, adds EIA outlook)
NEW YORK, Sept 10 (Reuters) - Oil prices slid more than $2 a barrel on Tuesday as Syria accepted a Russian proposal to give up its chemical weapons, making investors less nervous about the potential for U.S. military strikes against Damascus.
Brent tumbled toward its largest two-day drop since June after Russia said it was working with Syria on an "effective, clear, concrete" plan to put Syria's chemical weapons under international control.
The potential diplomatic breakthrough put the brakes on a planned vote in the U.S. Congress on the authorization of military force as lawmakers and the administration sought more time to assess Russia's proposal to put Syria's chemical weapons under international control.
"The market is in the process of removing the risk premium that Syria attributed to it," said Andy Lebow, vice president at Jefferies Bache in New York.
"The market's assessing less of a probability of any military action, given the diplomacy."
Brent for October delivery fell $2.86 to $110.86 per barrel by 1:20 p.m. EDT (1720 GMT) after sliding more than $3 to a session low of $110.59, its weakest level since Aug. 26.
U.S. crude fell $2.66 to $106.86 after also losing more than $3 to hit a session low of $106.39.
Investors also were encouraged that oil exports from Lybia may pick up soon. On Monday, the head of the Libyan government energy committee said a group tasked with resolving that country's oil paralysis will brief General National Congress with proposals on how to end the confrontation.
Last week, Libya's oil output fell to a post-war low of 150,000 barrels per day compared to its capacity of 1.6 million bpd. Exports have fallen to 80,000 bpd.
The recent slide in oil prices has eroded gains made on worries that a possible U.S.-led military strike against Syria might disrupt oil supplies from the Middle East. Late last month, Brent climbed to six-month peaks above $117 and West Texas Intermediate (WTI) hit a 28-month high of $112.24.
Front-month oil futures may also be under pressure because passive commodities investors have been selling front-month positions and taking positions in the second month, a monthly process called the "passive roll."
"You're selling the front month and buying the back month, so maybe it's softening the curve a little bit," said Lebow, indicating the spread narrowed between contracts for U.S. crude for October and November delivery.
The U.S. Energy Information Administration raised its 2013 world oil demand growth forecast by 20,000 barrels per day to 1.11 million bpd. In its monthly forecast, the agency cut its oil demand growth estimate for 2014 by 30,000 bpd to 1.19 million bpd.
OPEC said the world oil market was well supplied despite a plunge in Libya's output and forecast a further drop in its oil market share in 2014 due to rising supply from the United States and other countries outside the exporters group.
The U.S. industry group the American Petroleum Institute will release its weekly stockpile report at 4:30 p.m. EDT (2030 GMT). U.S. commercial crude oil and gasoline inventories were seen falling last week, while distillate stocks were forecast to have risen, an initial Reuters poll of analysts showed on Monday.
(Additional reporting by Lin Noueihed in London and Manolo Serapio Jr. in Singapore; Editing by Chris Reese and David Gregorio)